LETTER | Historically, zakat and waqaf had contributed greatly to the advancement of knowledge, the establishment of hospitals, orphanages, universities, etc. and led to great civilisations. They held a central role in Islamic fiscal policy. During the Umayyad and Abbasid eras, there was evidence of economic growth as a result of optimum management of zakat. It is one of the largest forms of wealth transfer to the poor and needy and is the source of Islamic society's economic strength and is interest-free.
During Umar bin Abdul Aziz's leadership for 30 months, no records of poor people could be found. The distribution of zakat then was not only for consumable activities but also for productive ones.
Later, it was relegated as only alms for the poor.
Zakat can serve as a balance between supply and demand in the microeconomic sector and help address the problem of poverty through the creation of purchasing power and the development of an entrepreneurial community.
In Malaysia, zakat distribution has a positive, but small impact on aggregate consumption. It should cover other forms of monetary aid that can generate a continuous flow of income for recipients. Recently, there are improvements in the form of business capital, business tools, business financing and working salaries.
When managed properly, zakat has the potential to help achieve national development goals i.e. economic empowerment. In Indonesia, UNDP began harnessing it for Sustainable Development Goal (SDG) projects by partnering with Baznas – the national zakat collection body. The latest is a partnership to support Covid-19 economic recovery.
The potential size of the annual zakat pool was estimated between US$200 billion and US$1 trillion by the World Bank and the Islamic Development Bank Group in 2016. And the aggregate resources pooled together from the potential zakat collection in 17 OIC countries will be enough to fund resources for poverty alleviation in all the 17 OIC countries combined.
According to Yusuf Qardhawi, zakat makes a fair contribution to social and economic stability. Not only for the present needs of the poor and needy but serves other functions that profoundly contribute to social life in a broad sense of social justice.
Besides providing for shelter, food, clothing, medication, education and transportation, we need to empower the beneficiaries (asnaf). Empowerment is not enough with just giving money but it includes mentoring and strengthening self-confidence.
However, because of some bureaucratic processes, many have given up and looked for solutions elsewhere with catastrophic consequences. There have been some improvements but there is still more room.
Zakat institutions need to be expanded and enhanced to build a new dimension especially in the distribution of zakat so that it becomes a competitive institution locally or even globally. The effectiveness of zakat management relates to the distribution mechanism, the quality and professionalism of the administrator and transparency in the governance and the institution itself.
The latest report in the Pusat Pungutan Zakat (PPZ) website is for 2018. While amounts collected are shown, how much was distributed through the various schemes was not reported.
Further, zakat is administrated by the Islamic religious council in every state and is responsible for determining the asnaf qualification and the type of relief. And each state has its own strategies and mission. There are so many duplications and this is unwise.
We are used to the traditional interpretations and we now need contemporary Islamic perspectives.
Even for the muallaf (one of the asnaf), there are many interpretations. Can we now have a new discourse on zakat management? Should we then have only one zakat management body instead of one for each state?
We need the concurrence of the Conference of Rulers to save time, effort, manpower and to reduce duplication. There will be more money available that can be distributed and a standard comprehensive priority assessment system introduced.
“Indeed, the wasteful are brothers of the devils, and ever has Satan been to his Lord ungrateful.” (Quran Al-Isra 17:27).
The principle of sustainability includes active participation of all sections of the community in all aspects and creating an ecosystem that will benefit all participants.
Invite big and successful Muslim businesses, universities, top motivational speakers and business coaches to assist. All the states must cooperate. For example, Selangor can provide a piece of land for asnaf in the Klang Valley or from other states to carry out their business activities in a central location.
It has to be high value-add and high gross margin projects and also synergistic where economies of scale can be achieved. It can be a self-contained township that could, with proper planning and sincere efforts, later transform into an industrial and/or technological hub.
There needs to be proper planning, implementation, monitoring and periodic assessment. Management personnel of this place will be selected from the present crop of administrators and guided by successful personalities to upgrade managerial and financial literacy.
I am very sure there are many who are willing to help. Where necessary, get assistance from international bodies like the UNDP.
Between 2015 to 2020, PPZ Kuala Lumpur and Lembaga Zakat Selangor collected more than RM8 billion and nationwide, the figure is much more.
Lembaga Tabung Haji is a success except for certain hiccups, let us be more focused and improve on accountability to make the zakat institution a success in achieving social and economic stability.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.